Tata Consultancy Services - 4QFY2016 Result Update - Angel Broking

For 4QFY2016, TCS posted revenue of US$4,207mn (V/s US$4,215mn expected), up 1.5% qoq. The growth was mostly volume led, which grew by 3.2% qoq. In constant currency (CC) terms, the company posted a qoq revenue growth of 2.1%. In rupee terms, revenues grew by 4.0% qoq to Rs. 28,449cr (V/s Rs. 28,454cr expected), led by rupee depreciation. The EBIT margin for the quarter came in at 26.1% V/s 26.7% expected. PAT came in at Rs. 6,341cr (V/s Rs. 6,201cr expected), up 3.8% qoq. The company expects a stronger FY2017 for which it has guided at an EBIT margin of 26-28%. We maintain our Buy on the stock with a target price of Rs. 3,004.

Quarterly highlights: For 4QFY2016, the company posted revenue of US$4,207mn (V/s US$4,215mn expected), up 1.5% qoq. The growth was mostly volume led, which grew by 3.2% qoq. In constant currency (CC) terms, the company posted a qoq revenue growth of 2.1%. In terms of geography, the company posted a CC growth of 2.4% in USA, 1.8% in Latin America, 3.6% in continental Europe, 2.2% in India, 1.1% in Asia Pacific and 9.5% in MEA while UK posted a dip of 0.4%. The EBIT margin for the quarter came in at 26.1% V/s 26.7% expected. PAT came in at Rs. 6,341cr (V/s Rs. 6,201cr expected), up 3.8% qoq.

Outlook and valuation: TCS highlighted that it had not received any negative indications on IT budgets/spending trends and expects FY2017 to be better than FY2016. Over FY2016-18E, we expect TCS to post a revenue CAGR of 13.0% in USD as well as INR terms.

Shares of TATA CONSULTANCY SERVICES LTD. was last trading in BSE at Rs.2530.05 as compared to the previous close of Rs. 2526.95. The total number of shares traded during the day was 355518 in over 7191 trades.

The stock hit an intraday high of Rs. 2539.6 and intraday low of 2511.1. The net turnover during the day was Rs. 898905419.

Source : Equity Bulls

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